Stock Market Watch

Forex Market Update: Dollar Index Slips

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The dollar index slipped on Friday as investors keep a close eye on Washington, hoping lawmakers to break the budget impasse before the weekend.

On Thursday, House Speaker, John Boehner led the GOP leadership to hold talks with President Obama. It is expected that lawmakers might ink a short-term deal, which would allow to raise the nation’s debt limit from current $16.7 trillion, averting a debt-default. This way, lawmakers will get some more time to carry on their negotiations as a part of broader budget-deal.

At last check, the Dollar Index, a gauge on U.S. unit’s performance vis-à-vis a basket of rival currencies, slipped 0.14% to 80.32.

The WSJ$ Index, whose currency basket is slightly broader, fell 0.13 to 72.71.

Earlier this week, the dollar sunk to its eight-month low against a basket of major currencies as the policy stalemate in Washington over the budget issue prompted investors to seek safety in safe-haven currencies such as yen and Swiss Franc.

However on Thursday, the dollar bounced back amid reports that lawmakers were showing signs of reconciliation.

“Markets believe some kind of deal or postponement will ease the tension (over debt default)… We had a very strong rally inequities and dollar/yen is higher and that is a signal there isa bit more risk appetite in the market,” commented Niels Christensen, FX strategist at Nordea, according to Reuters.

Meanwhile, Paul Bednarczyk, head of research at 4CAST reckons that lawmakers will reach a deal before the end of the weekend.

 








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Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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